Introduction

As we look upon the global growth story, we come across a common fact i.e. the direction in which
almost all the major economies have moved. The level of economic growth witnessed in the major
economies has been characterised by first, a general in their primary sector (activities related to
agriculture & allied activities), in the second stage the shift has been towards the secondary sector,
i.e. an increase in industrial activities (including an sharp increase in the manufacturing activities) &
finally in the third stage, increase in the tertiary sector. This is also consistent from the famous
“Kuznets Curve”, that describes the relationship between economic development & income inequal-
ity follows a specific pattern as a country undergoes economic development. According to the
Kuznets Curve, in the first stage an economy would be in a traditional state, this would be charac-
terised by growth in agrarian economy, limited use of technology & low and similar levels of in-
come for the majority of the population (Traditional Society State). Thereafter, a rapid growth phase
where industrialisation and modernisation would accelerate (Pre-take off & take off stages), mark-
ing a significant shift from agrarian economy to a more industrialised & urbanised economy. In-
come inequalities would also tend to grow as certain regions would grow faster as compared to oth-
ers. In the final stages, education and technological advancements further contribute to economic
growth. Income inequality may continue to rise but at a slower pace, and there may be efforts to ad-
dress disparities. This is a period where services/tertiary sector outgrows the industrial sector. So
basically, from agrarian to secondary to tertiary is the direction in which development has occurred
globally (barring the Indian experience).

This has been more or less the case with all the major economies throughout the world (with a ma-
jor exception being India). This write-up is further divided into three broad sections - the first sec-
tion talks about India’s unique growth story (which lays stress on how Primary, secondary & ter-
tiary sectors grew in India, which was unlike the case witnessed by much of the global economies),
in the second section it talks about constant share of secondary secondary (Industries combined with
the manufacturing sector) in the GDP composition since, & in the final section it talks about the
scope or strengths which can make India as a emerging leader in the global space.

India's Unique Growth Story

India's growth story, however, deviates from this conventional trajectory. While the country has sig-
nificant presence in all three sectors, but exponential growth has been in the services sector, while
agriculture continues to witnessed grow at a low rate & secondary sector has just maintained a con-
stant share in the GDP, all this while agriculture still employs the maximum population. The service
sector, notably information technology and business process outsourcing, has played a pivotal role
in India's economic growth, contributing significantly to its GDP.
Contributing Factors to India's Unique Growth Trajectory are as follow: Demographic Dividend, In-
dia's large and youthful population has been a driving force behind its service sector growth, partic-
ularly in IT and software development. Globalisation and Information Technology, India's integra-
tion into the global economy, coupled with advancements in information technology, has propelled
the growth of service-oriented industries. Policy Initiatives, economic liberalisation in the 1990s,
combined with pro-business policies, has fostered the expansion of various economic sectors. En-
trepreneurship and Innovation, the rise of a dynamic entrepreneurial culture, especially in the tech-
nology and start-up domains, has contributed to India's unique economic landscape.

In conclusion, while the majority of major economies have followed a distinct trajectory of eco-
nomic development, India's growth story is characterised by a more intricate and simultaneous pres-
ence of all three sectors. The country's ability to harness the potential of its diverse sectors has posi-
tioned it as a unique player in the global economic landscape. As India continues to evolve, under-
standing and leveraging its distinctive growth trajectory will be crucial for sustainable and inclusive
development.

Growth of the Primary Sector in India's GDP Since Independence

The primary sector, comprising agriculture, forestry, fishing, and mining activities, has historically
played a crucial role in India's economy. At the time of Independence in 1947, a majority of the
population was employed in agriculture (almost 90%), and the sector contributed significantly to the
Gross Domestic Product (almost 60%).

Post-Independence Era for agriculture:

In the initial decades after Independence, the primary sector dominated the Indian economy, with
agriculture being the primary contributor. Since the inception of Planning commission, & adoption
of Five Year Plans, the first two Five year Plans focussed heavily on agriculture, majorly trying to
solve the problem of irrigation. Other major policy initiative for agriculture came in the form of
land reforms of the 1960’s, followed by nationalisation of banks which happened in 1969 (just prior
to the Green Revolution). All of these efforts were aimed to increase agricultural productivity and
reduce poverty in rural areas.

Despite the early successes, the primary sector faced challenges such as land fragmentation, water
scarcity, and lack of modern agricultural practices. Over time, there was a gradual shift in the struc-
ture of the Indian economy with increasing contributions from the secondary (industrial) and ter-
tiary (services) sectors. However, Green Revolution, marked by the adoption of high-yielding crop
varieties, modern irrigation techniques, and improved agricultural practices, significantly increased
agricultural productivity. However, challenges like unequal distribution of benefits and environ-
mental concerns also emerged.

Recent Trends:

In recent years, there has been a continued effort to diversify and modernise the agricultural sector.
The government has implemented schemes to promote sustainable agriculture, improve irrigation
facilities, and enhance farmers' income. However, challenges such as farmer distress, land degrada-
tion, and climate change impacts persist. The growth of the primary sector in India's GDP since In-
dependence reflects a complex interplay of policy interventions, technological advancements, and
evolving economic structures. While the sector's relative contribution to GDP has decreased over
the years due to the rise of the secondary and tertiary sectors, agriculture remains a vital source of
livelihood for a significant portion of the population. Balancing the need for economic growth with
sustainable and inclusive development in the primary sector continues to be a priority for policy-
makers in India.

Growth of the Secondary Sector in India's GDP Since Independence

The secondary sector, encompassing manufacturing and industry, has undergone significant trans-
formations in India since Independence in 1947. The growth of this sector has been a crucial com-
ponent of the country's economic development.

Post-Independence Era:
In the early years after Independence, India's economy was largely agrarian, with limited industrial-
isation. The government, recognising the need for industrial growth, initiated various policies and
plans to promote the manufacturing sector. The third Five year plan laid focus on heavy & critical
industries, post which licensing was introduced to promote industries but it backfired immensely
(and instead this period led to stalling, heavy corruption & other downsides in the sector). Our ini-
tial model of industrialisation was based on Import-substitution & it was only in the late 1980’s &
early 1990’s that we finally started promoting industries (some policies also favoured small-scale
industries reservation, promotion of cottage, msme industries, etc).

In subsequent decades, India underwent some major changes in the industrial policy, including the
liberalisation measures of the early 1990s. These reforms aimed to open up the economy, attract
foreign investment, and promote a more competitive and efficient industrial landscape. The liberali-
sation of the Indian economy led to a significant boost in industrial activities. The removal of trade
barriers, encouragement of foreign direct investment (FDI), and technological advancements con-
tributed to the growth of the secondary sector. India witnessed the emergence of new industries, the
expansion of existing ones, and the integration of the economy into global value chains.

Special Focus on Manufacturing:

Governments since independence has took various initiatives, such as Third Five Year Plan (also
called Mahalanobis Plan), Small Scale industries reservation, licensing/de-licensing, Make in India,
Atamnirbar Bharat & so on and so forth relating to change the industrial landscape of the country.
As the sector has high employment elasticity, in the sense, that it acts as a major employment
source, efforts of a renewed focus has always been on the policy makers mind. More recently, ef-
forts have been made to enhance the ease of doing business, streamline regulatory processes, and
incentivise domestic and foreign investment in the manufacturing sector.

While the secondary sector has shown significant growth, it has also faced challenges such as infra-
structure bottlenecks, regulatory complexities, and environmental concerns. Balancing industrial
growth with sustainability and inclusivity remains a priority. The growth of the secondary sector in
India's GDP since Independence reflects a transformative journey from an agrarian economy to one
marked by industrialisation and diversification. The sector's contribution to GDP has expanded sig-
nificantly but has remained at a constant level at an overall contributor to the GDP (in the range of
20% to 30%, since independence), undoubtedly, it had played a crucial role in job creation, techno-
logical advancement, and overall economic development. Continued efforts to address challenges
and leverage opportunities in the secondary sector are vital for sustaining and enhancing India's
economic growth.

Growth of the Tertiary Sector in India's GDP Since Independence

The tertiary sector, also known as the services sector, encompasses a wide range of activities, in-
cluding trade, finance, education, healthcare, information technology, and hospitality. Since Inde-
pendence in 1947, the tertiary sector has experienced remarkable growth and has become a domi-
nant force in India's evolving economic landscape.

Post-Independence Era:

In the early years after Independence, the services sector in India was relatively modest to even
non-existent compared to agriculture and manufacturing. However, with economic reforms and
changing global trends, the tertiary sector gradually gained prominence. The first major shift in the
policies in favour of service/tertiary sector came with the advent of liberalisation policy adopted in
the early 1990s. Policies that facilitated trade, opened up the financial sector, and encouraged for-
eign investment led to the rapid expansion of services. This period saw significant growth in infor-
mation technology (IT), business process outsourcing (BPO), and other knowledge-based indus-
tries. Like China is called ‘factory of the world’, India became ‘Office of the world’. The IT
Revolution, late 20th and early 21st centuries witnessed the emergence of India as a global IT and
software services hub. Cities like Bangalore, Hyderabad, and Pune became major technology and
business centres, attracting both domestic and foreign investments.

The services sector diversified to include a broad spectrum of activities, including financial ser-
vices, telecommunications, healthcare, tourism, and education. The growth of the tertiary sector was
characterised by innovation, increased efficiency, and a focus on high-value-added services.

Contributions to GDP & Employment:

The services sector has become a significant contributor to GDP and employment. It has played a
crucial role in absorbing the growing workforce and has been a key driver of economic growth
(though the employment elasticity of tertiary sector remains largely low when compared with sec-
ondary sector), but the forward & backward linkages it has are enormous. The kind of trickle-down
that was expected out of the secondary sector never materialised, in fact, it was the service sector
where some extent of trickling down was visible in terms of sub-services job which were created by
employment generation in the core services.

While the services sector has shown robust growth, challenges such as skill gaps, regulatory issues,
and infrastructure constraints exist. Addressing these challenges and leveraging emerging opportu-
nities, especially in areas like digital services and fintech, is crucial for sustaining growth. The
growth of the tertiary sector in India's GDP since Independence reflects a fundamental shift in the
country's economic structure. From an agrarian and manufacturing-dominated economy, India has
evolved into a services-driven economy with a strong emphasis on technology and innovation. The
continued expansion of the services sector is essential for ensuring sustained economic growth, job
creation, and global competitiveness.

Constant Share of Secondary sector in the Indian GDP

It's important to note that a constant/stable share in the GDP doesn't necessarily indicate stagnation
or lack of growth in the secondary sector. It is however, peculiar or it does comes as a surprise to
most of the economists around the globe that how has been the contribution of secondary sector to
the Indian GDP has remained constant (between the range of 20% to 30%, in throughout the last
three decades). India has a diverse and complex economic structure with a significant presence of
the primary (agriculture) and tertiary (services) sectors. While agricultural sector, is still the largest
employer to the workforce (with almost 50% of the workforce employed in agriculture & allied ac-
tivities), therefore, it does plays a significant role in India's economy. On the other hand, growth of
the tertiary sector, especially in areas like IT and services, has also been substantial which has
skewed the contribution of services sector to the GDP (from less than 10% contribution in 1950’s to
around 60% contribution throughout 90’s & continuing).
One possible explanation of this comes from the fact that in India, Industrial growth has been highly
skewed & unbalanced, while some industries were progressing (let’s take example of heavy indus-
tries proposed in the third five year plan), some other industries were shutting down (textile indus-
tries of the Western India due to stiff global competition as well as technological upgradation &
other political reasons). This is also true in terms of some of the locations too, major parts in the
country has witnessed gradual industrialisation but some regions post-independence has witnessed
drastic fall in the level of industrialisation (this is true for entire North-Eastern Region). Further,
while the Labor-intensive industries, like textiles and handicrafts, continue to employ a significant
portion of India's workforce and plays an essential role in job-creation in the rural areas particularly.
Their persistence contributes to the constant but not growing share of the secondary sector.

Some further challenges such as infrastructure deficiencies, regulatory hurdles, and bureaucratic red
tape have hindered the growth of the secondary sector. However, addressing these challenges
through infrastructure development, ease of doing business reforms, and skill development can po-
tentially lead to a changing share in the future.

Scope & Strengths

India possesses several key strengths and factors that position it as an emerging leader in the global
space. These strengths contribute to the country's influence and potential in various domains. Here
are some of the most significant ones:

Economic Growth and Market Potential:

India's large and growing economy offers immense market potential for domestic and international
businesses. The young and expanding consumer base contributes to the attractiveness of the Indian
market. India is also called ‘Office of the World’, Information Technology and Innovation has al-
ways been a stronghold of Indian IT industry. A growing number of tech startups and a skilled
workforce contribute to India's innovation potential. Then there are diplomatic influence, size of the
Indian market combined with its strategic location and foreign policy initiatives enhance its diplo-
matic influence in the region and beyond. Active participation in international organisations and a
commitment to peacekeeping missions contribute to its global role. India's location at the crossroads
of South Asia, the Middle East, and Southeast Asia is geopolitically significant. This positioning of-
fers opportunities for economic and diplomatic engagement. While the major developed countries
like Japan & other European countries face an older population (where population growth has actu-
ally been negative) & due to aging population burden on the government authorities has increased,
India is at the peak of its demographic dividend. India's youthful population offers a significant ad-
dition to the labor force and also contributes to economic productivity. This demographic advantage
is a valuable asset in various sectors, from manufacturing to services.

Space Exploration and Technology remains another area where India has progressed remarkably.
India's space agency, ISRO, has made significant advancements in space technology. Accomplish-
ments such as the Mars Orbiter Mission have garnered international acclaim. India space agency
specialises in providing satellite launch vehicle (both PSLV & GSLV) to the entire world.

India is also making strides in renewable energy sector with ambitious targets for solar and wind
power. These also include signing up with International climate treaties like COP 26, Paris Agree-
ment & so on. Efforts to combat climate change and address environmental issues align with global
sustainability goals. Also, India is a prominent destination for international students, fostering edu-
cational and cultural exchanges in the entire Asian region. Renowned institutions and a diverse
range of courses attract scholars from around the world.
The Indian diaspora, which is substantial worldwide, further contributes to India's global influence.
Emerging Manufacturing Hub: "Make in India”, “Atamnirbhar Bharat” and other initiatives pro-
mote manufacturing and investment in sectors like electronics and automobiles. India's manufactur-
ing potential is gaining recognition in the global supply chain. India's pharmaceutical industry is a
global leader in generic drug production. The healthcare sector attracts medical tourism due to its
quality healthcare services at competitive prices.

India's diverse strengths, along with its ability to adapt to evolving global dynamics and address
challenges, make it an emerging leader in various aspects of the global landscape. Continued focus
on sustainable development, innovation, and diplomatic engagement will play a crucial role in In-
dia's ascent on the global stage.

Digital Payment Revolution (Global Fintech Leader)

The digital payment revolution in India has been transformative and has fundamentally changed the
way people in the country conduct financial transactions. Several key factors have contributed to
this revolution:

• Demonetisation in 2016: The Indian government's decision to demonetise high-value currency

notes in 2016 provided a significant push for digital payments. With the sudden shortage of physi-
cal cash, people turned to digital payment methods as a more convenient and secure way to trans-
act.

• Unified Payments Interface (UPI): UPI is a real-time payment system that enables users to in-
stantly transfer funds between bank accounts using a mobile app. It has become the backbone of
digital payments in India, making transactions simple, secure, and widely accessible.

• Government Initiatives: The Indian government launched various initiatives to promote digital
payments, including the Pradhan Mantri Jan-Dhan Yojana (financial inclusion program) and the
BHIM (Bharat Interface for Money) app, which encourages cashless transactions.

• Mobile Wallets and Payment Apps: Companies like Paytm, Google Pay, PhonePe, and others
have developed user-friendly mobile wallet and payment apps that allow people to make pay-
ments for a wide range of services, from utility bills to online shopping.

• Rural and Urban Adoption: Digital payments have gained popularity not only in urban areas
but also in rural India. The government's efforts to expand banking services to rural areas have
helped in promoting financial inclusion through digital channels.

• Business Integration: Retailers, businesses, and e-commerce platforms have integrated digital
payment methods into their operations, making it easy for customers to pay for goods and ser-
vices without cash.

• QR Code Technology: The use of QR codes for payments has become widespread. Merchants,
both small and large, display QR codes that customers can scan with their mobile apps to make
payments.

• Financial Inclusion: Digital payments have played a pivotal role in increasing financial inclu-
sion. Many unbanked or underbanked individuals now have access to digital wallets and banking
services through their smartphones.
• Security Measures: The government and financial institutions have put in place robust security
measures, such as two-factor authentication, to ensure the safety of digital transactions. This has
built trust among users.

• GST and Digital Records: The introduction of the Goods and Services Tax (GST) further incen-
tivised businesses to adopt digital payment methods to maintain accurate records and comply with
tax regulations.

• Growing E-commerce: The growth of e-commerce in India has fuelled the need for digital pay-
ments. Online shopping and payment gateways have become integral to the retail landscape.

• Global Recognition: India's digital payment revolution has garnered global recognition, with in-
ternational tech companies investing in the Indian market and using it as a testing ground for in-
novative payment solutions.

The digital payment revolution in India has not only made transactions more convenient but has
also reduced the reliance on physical cash, promoted financial inclusion, and driven economic
growth. This transformation has positioned India as a leader in the global fintech industry, with its
innovative solutions influencing the way digital payments are conducted worldwide.

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